#2 - Financial Knowledge is Power

“Formal education will make you a living; self-education will make you a fortune.” 

Jim Rohn

The interesting thing about financial education is that you don't realize how bad you need it until you start receiving it. Although I started investing about five years ago, it wasn't until less than two years ago that I truly started investing in my financial education. Needless to say, I immediately realized how foolish and uneducated I had been up to that point.

It is not uncommon to hear someone say that a book changed their lives. However, most times this is actually a gross exaggeration. What people actually mean is that the book had a powerful effect on them or that they absolutely loved reading that book. Even I used to think and occasionally say that books like Herman Hesse's Siddhartha or Eiji Yoshikawa's Musashi had changed my life because they had changed my way of thinking about some important aspects of life. Yet, I can now see that those books didn't really change my life.

I know this because two and a half years ago one book truly changed my life in a drastic way. When I read Rich Dad, Poor Dad by Robert Kiyosaki, I realized how ignorant I had been about money, investments and even life in general up until that point. So the first and most important thing I want to tell you today is this: read Rich Dad, Poor Dad by Robert Kiyosaki! It will transform your world by allowing you to understand money for the first time in your life. I know this is a bold claim, but it's true. If you read the book and don't like it, feel free to tell me all about it, but I don't think that will happen. By the way, Robert Kiyosaki is a self-made multi-millionaire real estate investor, so he knows what he is talking about.  

The main message contained in Rich Dad, Poor Dad is that, although most people are literate, they are also financially illiterate. There is a big difference between the two. Although people know how to read and to write, they can't read or write financial statements, which just happens to be the most important single element in personal finances. And if you can't even read financial statements you don't understand money at all. That is why Robert Kiyosaki is such a big advocate of teaching people financial literacy, a crucial skill that is systematically ignored by the world's many national educational systems. I personally went to school in four different countries and not once was I taught how to read financial statements or, for that matter, any other basic financial skills. This is a travesty and it constitutes a huge handicap in a world where money matters a great deal.

Financial literacy changes lives. Financial knowledge is a key skill. So you have to start learning these things because you sure didn't learn them at school. Read Rich Dad, Poor Dad and then keep reading books about finance and investments until you start to understand how money works. This is the main message of this post.

In fact, when you start educating yourself on the subject of money, you will soon realize that there are thousands of books on the subject out there. Some are good and some are bad, but the more you read the more knowledgeable you will become. This will change your life in a profound way, I promise you. It has certainly changed mine.

I believe in financial education because it teaches us skills of immense value in our society. Reading financial statements is an essential skill that most people in my generation lack. And the sad thing is that they don't even realize how big of a handicap that is. You can learn to read a financial statement in one day and it will deeply change your life for the better, and yet most people will never learn this basic skill. That will keep them poor. Even worse, they won't even realize that they're poor or why they're poor. They will keep looking at rich people and thinking they got to where they are because they were born wealthy or because they're dishonest or both things. They will distrust and envy rich people and they will remain poor or middle class. Becoming rich is not easy; you don't do it in a day or a month or even a year. It takes time and effort, and it also requires plenty of knowledge. That's why I'm educating myself and that's why  I think you should start doing the same.